Blog Post 4
Responding to Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne - HBR
Until recently, video games were considered the domain of the young, anti-social male. Regardless of platform, the demographic remained nearly unchanged even as the medium evolved from stand-up arcades to personal gaming consoles. The culture of video games co-existed with the product during its explosive growth in the 1980s and 1990s. As a saturated market, new games cropped up weekly – but many failed to gain traction. The red ocean of video games saw the formation and dissolution of hundreds of video game companies which consistently failed to survive in the rapidly evolving industry.
Along came Nintendo. The first Nintendo platform, a home gaming console, sought to simplify the video game experience by providing an accessible gateway into the flourishing world of video games. Unlike previous approaches, many of which required complex installations on PCs or a steep learning curve (commodore) – Nintendo presented a simplified approach to this form of digital entertainment. Not only did the Nintendo platform socialize video gaming by encouraging multiplayer games, it also extended to other demographics such as female and adult customers. This Blue Ocean was a major hit for Nintendo, which not only captivated much of the existing video game market, but also expanded the horizons of the target genre.
Even with the advent of Nintendo, and the successful consuls which followed (Sega, Playstation, etc) – there was a still a stigma associated with video games that quickly turned to red waters. Although more accessible, it was deemed anti-social to play video games in the company of others. Even for multiplayer games, the interaction was Human to Machine and lacked much Human to Human linkage. This presented a new Blue Ocean which Nintendo waded into – social video gaming. The launch of the Wii game console took the company into new territory by creating a platform which was now aimed at all demographics outside of the traditional video gaming group. Non-geek males, females, young children, adults, and even seniors could quickly adapt to the simple platform and engage in the social heavy games sold for the platform. The Wii sought to intercede in human to human gaming interaction as a facilitator. It also heavily marketed personal gaming that appealed to unique demographics, such as athletes, or trivia buffs.
Nintendo was able to pursue differentiation and low cost at the same time and avoid disruptive technology by being at the forefront of innovation. Still, the video game industry is rapidly changing with the advent of Smart Phones and Smart Televisions. Nintendo needs to find a way to establish a new niche which will allow them to reach even further outside the existing customer spectrum. Perhaps there are opportunities in virtual reality, developing markets, education, or even professional applications? Wherever these new waters are, Nintendo has recently shown the aptitude to continue earning a high score and ultimately avoid a GAME OVER.